Nonprofits vary in size, from the small one-person shop to the 30-plus person juggernaut of a workplace. Usually, the larger the organization’s staff is, the less worried they are about paying for day-to-day operations. But no matter the size of the staff, for fundraising to be effective, it must be well-balanced and have revenue in many streams. So many of the smaller organizations that I have come across have an unhealthy focus on grants. Part of the reason stems from a fear of rejection. It is much more comfortable to apply to a faceless institution (government, business, etc.) and ask for support than it is to sit across from a person and ask for that same level of support.
While applying for (and receiving) grant money is important, it can sometimes skew an organization’s priorities. Many organizations do not know where to begin to find sources of grants in the first place.
People use the term grant when they actually mean gift. A grant is an application process with deliverables. A gift usually transpires after some two-way conversations.
This type of funding can be municipal, state/provincial, or federal. Sometimes these grants can truly be a lifesaver for an organization as they are five, six, or even seven-figures. However, applying (and receiving) these grants can often be burdensome. There is likely a complex reporting mechanism attached to the grant that the recipient would need to factor in when applying. Sometimes it may not be worth it to apply for the grant, once you calculate the costs of applying, administering and reporting on the grant. On top of that, many governing bodies will not allow the grant to pay for the time to administer the grant itself.
The government creates these high-level grants to help them solve a problem, not necessarily for the nonprofit to solve its own problem. Often, I have seen organizations cram that square peg into the round hole to show they fit within the governmental priorities laid out in the grant. And when the project is complete, there is a huge fear that their program may not have “measured up” and may jeopardize future governmental funding. (I write about the concept of noble failure here.)
These grants come from foundations — businesses, community or personal. Sometimes they are open to accepting unsolicited applications, but often are not. Many businesses and individuals have set up their own foundations for both governance and tax treasons. Maybe the business/individual is merely flowing their philanthropic dollars through the Foundation as opposed to through the business or as a personal gift.
Community Foundations, on the other hand, comprise designated and undesignated gifts in their coffers. Some funds are donor-advised while they distribute others through an allocation/grants committee. For the donor-advised funds, it is unlikely that there is an application process, but rather a discussion with the fund holder.
It is never good for any fundraising organization to put all of their eggs in one basket, so to speak. If grants are the magic beans that you are hoping to receive for your lifeblood, you will probably be anemic. You want to ensure that you have a well-balanced fundraising program, comprising direct mail, major gifts, events, bequests and community support.
While grants can be transformational to an organization’s revenue, they may not be a revenue stream that can recur with any sort of predictability. So beware. It is important to have that well-rounded fundraising program.
Until next week.